Benjamin Yu vs. National Labor Relations Commission (NLRC)

 FACTS:

Petitioner Yu was hired as the Assistant General Manager of Jade Mountain Products Company Limited primarily responsible for the overall operations of marble quarrying and export business of said partnership. He was hired by a virtue of a Partnership Resolution in 1985 with a monthly salary of P4,000.00. Initially he received only half of his stipulated monthly salary and was promised by the partners that the balance would be paid upon securing additional operating funds from abroad. However, in 1988 without his knowledge the general partners as well as one of the limited partners sold and transferred their interest to Willy Co and Emmanuel Zapanta. Thus the new major partners decided to transfer the firm’s main office but opted to continue the operation of the old partnership under its old firm name and with all its employees and workers except for the petitioner. Upon knowing of the changes in the partnership, petitioner went to the new main office to meet the new partners and demand the payment of his unpaid salaries, but the latter refused to pay him and instead informed him that since he bought the business from the original partners, it was for him to decide whether or not he was responsible for the obligations of the old partnership including petitioners unpaid salaries. Hence, petitioner was dismissed from said partnership.

ISSUES:

1.      Whether the partnership which had hired the petitioner as Asst. General Manager had been extinguished and replaced by a new partnership composed of Willy Co and Emmanuel Zapanta.

2.      Whether petitioner could assert his rights under his employment contract as against the new partnership

HELD:

1.      Yes. The legal effect of the changes in the membership of the partnership was the dissolution of the old partnership which had hired the petitioner in 1984 and the emergence of the new firm composed of Willy Co and Emmanuel Zapanta in 1988. This is based on the following provisions:

Art. 1828. The dissolution of partnership is the change in the relation of the partners caused by any partner ceasing to be associated in the carrying on as a distinguished from the winding up of the business.

Art. 1830. Dissolution is caused:

          1.      without violation of the agreement between the partners;

             b. by the express will of any partner, who must act in good faith, when no definite term or                    particular undertaking is specified.

       2.      in contravention of the agreement between the partners, where the circumstances do not                   permit a dissolution under any other provision of this article, by the express will of any partner           at any time;

However, the legal consequence of dissolution of a partnership do not automatically result in the termination of the legal personality of the old partnership as according to Art. 1829, “ on dissolution of the partnership is not terminated, but continues until the winding up of the partnership affairs is completed. The new partnership simply continued the operations of the old partnership under its old firm name without winding up the business affairs of the old partnership.

2.      Yes. Under Art. 1840, creditors of the old partnership are also creditors of the new partnership which continued the business of former without liquidation of the partnership affairs. Thus, creditor of the old Jade Mountain, such as the petitioner is entitled to enforce his claim for unpaid salaries, as well as other claims relating to his employment with the old partnership against the new Jade Mountain.